Cost curb aids Cairn's stellar Q2 show; stock gains limited: Pro

Improved operational efficiencies with supportive crude prices helped Cairn India report stellar set of earnings for the second quarter, say experts tracking the company.

Cairn's consolidated net profit for the second quarter doubled sequentially to Rs 779 crore, the highest in last six quarters. Consolidated revenue during the quarter increased 8.1 percent to Rs 2,038.6 crore on sequential basis as discount to Brent for Rajasthan crude slipped substantially from USD 8.2 a barrel to USD 4.3 a barrel, the company said.The key takeaway, however, was the earnings before interest, tax, depreciation and amortisation margin which jumped past 50 percent. Barring some contribution from increased other income and foreign exchange gains, the stellar performance was largely due to improved cost control, experts say.

Commenting on the results, Sanjiv Bhasin of IIFL told CNBC-TV18, "While it has taken about 3-4 quarters for the company to stabilise, it is one of the most efficient oil producers. The synergies have played out now with crude being closer to USD 50 a barrel."However, since the stock has outperformed recently upside may be capped, he says.

He believes energy stocks have been leading the indices from the front and might continue to play a big role in taking the Nifty to new highs.Watch video for more...